US markets finished higher on Wednesday after the Federal Reserve cut interest rates for the third consecutive meeting and signalled a shift toward supporting a cooling economy. The Dow Jones Industrial Average rose 497 points, or 1.1%, to 48,057.75. The S&P 500 gained 0.7% to 6,886.68, briefly trading above its prior record close, while the Nasdaq Composite added 0.3% to 23,654.16.
The Fed lowered the federal funds rate by 0.25 percentage points to a range of 3.5%–3.75%. Markets interpreted both the rate cut and the statement as broadly supportive for equities. Short-term Treasury yields moved lower after the central bank confirmed it would begin buying short-term bonds, modestly expanding its balance sheet.
Policymakers also acknowledged softening labour market conditions, shifting their focus away from inflation and toward sustaining economic momentum. While the Fed refrained from signalling the timing of its next move, it effectively ruled out any near-term rate hikes.
Traders went further than the Fed’s own projections, with futures suggesting a strong chance of two or more cuts next year. Upgraded forecasts for growth and inflation added to the positive tone, helping the market extend its rebound into December.
ASX futures point to a strong local open
The Australian sharemarket is set for a solid start to Thursday’s session after the US rate cut lifted global sentiment. The SPI futures are up 76 points, or 0.9%, at 8658, signalling a firm opening for local trade as investors move into the final stretch of the year.
The Australian dollar has climbed to a three-month high as the Fed’s rate cut boosted global risk appetite. The currency was up 0.6% to US66.80¢ by 8.25am AEDT, extending its gains since the start of 2025 to 7.4%.
